Mohammad Reza Farzin, the governor of the Central Bank of Iran said $500 million credit line was given to meet the currency needs of knowledge-based firms in the current fiscal year that started in late March.
In a meeting with the vice president for scientific and tech affairs and representatives of leading knowledge-based companies, Farzin noted the support of the banking sector for the big companies.
"To address the currency issues faced by knowledge-based companies and effectively support them, $500 million in credit was allocated to them," the CBI website reported.
Referring to the formation of the Foreign Exchange Provision and Allocation Committee at the CBI with the participation of the Ministries of Industry, Mining and Trade, Health, Medical Education, and Agriculture, he said the committee determines the forex needs of different sectors based on available resources and allocates credit accordingly.
"Considering the need for promoting knowledge-based companies and expedite solutions to the problems of their currency needs, an additional $500 million credit will be provided this year apart from the regular allocation."
The terms and conditions for the allocation of credit will be determined in collaboration with the office of the president's deputy for science and technology and the Ministry of Industry, Mining, and Trade.
In light of ongoing developments regarding the release of Iran's frozen assets in other countries due to the US sanctions, the special credit for knowledge-based companies will have the potential for expansion, he said without elaboration.
The CBI has pledged to increase funding for the knowledge-based enterprises and said new policies will be announced to help find and facilitate collateral the firms need to borrow.
According to government data released in mid-2021, an estimated 6,0000 plus knowledge-based companies are active nationwide.
A knowledge-based economy is a system of consumption and production based on intellectual capital, in which a significant part of the company’s value may consist of intangible assets, mainly the value of its workers’ knowledge (intellectual capital).
The scope of a knowledge-based economy is not limited to the tech industry. It can also be used in other sectors like IT, nanotechnology and biotechnology and other high tech firms.
Depending Largely on Banks
Iran’s knowledge economy largely depends on banks for funds but there are plans to help them access money via the stock market.
Acknowledging the liquidity and circulating capital challenges faced by knowledge-based firms and the urgency to promptly provide them cash, the CBI boss instructed the formation of a committee to develop the necessary guidelines for rial facilities, in collaboration with the Credit Department of the Central Bank and the office of the vice president for science and tech.
Farzin highlighted the significant growth in granting facilities to knowledge-based companies, stating that last year, 187 trillion rials ($45 billion) in facilities were allocated, indicating a growth of 165%. In the first two months of the current year, 20 trillion rials ($4.7 billion) was provided to this sector, reflecting a growth rate of 85%.
The governor emphasized the banking network's strong support for knowledge-based companies active in the banking communication sector.
"The development of banking relations with neighboring countries is among CBI priorities and the use of domestic knowledge-based companies is obviously a priority."
Foreign Ties
Connection of Iran's Shetab Card Network with the Mir System of Russia is underway, and efforts are being made to establish connections with China and Turkey as well, he said.
The CBI said banks and credit institutions gave 897.1 trillion rials ($2.32 billion) to knowledge-based companies in the first eight months of the last fiscal year (ended March), up 122.6% from last year.
The loans went to 1,700 firms reflecting the inclination of the banking sector to support the knowledge economy, the CBI said on its website.
It has pledged to increase support to startups, saying new measures will be announced to help ease collateral such firms need for borrowing.
CBI data indicates that private banks are seemingly eager to finance knowledge-based companies collectively allocating 84.3% of the total loans in the eight months. Private lenders posted 168.2% growth in loans to such firms.
Private banks, namely Bank Mellat, Bank Saderat and Tejarat Bank, collectively gave 402 trillion rials ($1.04 billion) or 44.9% of the loans during the period to 924 knowledge-based companies.
According to the central bank, Bank Mellat topped the list of banks in terms of loans to startups with 163.8 trillion rials ($425.4m), followed by Tejarat Bank at 137.7 trillion rials ($357.6m) and Bank Saderat 81.1 trillion rials ($210.6m).
Bank Melli Iran, Bank Sepah and Post Bank, three commercial government-owned lenders accounted for 10.5% of total loans. The share of five specialized banks, all owned by the government, in financing knowledge-based firms was 5.2%.
The CBI provided data on knowledge-based companies loans in the eighth month of the fiscal year (ended Nov 22, 2022) saying that banks paid 109,1 trillion rials ($283.3m) to 597 applicants, up 83% on the same period last year.
During the month, Bank Mellat again topped the list with 20.7 trillion rials ($53.7m), followed by Tejarat Bank 16.9 trillion rials ($43.8m) and Bank Melli 13.3 trillion rials ($34.5m).
